“Micro” payments, in the context of electronic funds transfers and/or Internet sales transactions, refers to payments of less than about $10.00, particularly those less than about $2.00. At such levels, the transaction costs significantly undercut even the nominal profitability for the transaction. This limitation constrains the nature of goods and services offered for sale electronically, as compared to physical sales where cash allows the transaction to be profitably conducted.
In addition, Internet purchases are generally encumbered by several other problems, including anonymity, security and ease of use. Online purchases and related fraud prevention measures normally require the buyer to provide personal information including name, mailing address, e-mail address, telephone number. The vendor may then sell this information, resulting in a barrage of electronic spam and traditional junk mail being sent to the seller and providing an avenue for identity theft. Anonymity of the type associated with cash transactions is not available in electronic transactions.
Credit or debit card information must also be disclosed in electronic transactions, creating security risks with each site at which a consumer makes purchases. Security and fraud prevention measures associated with most electronic transactions generally do not require independent verification of the purchaser's identity (apart from the personal information provided for billing), such that illicit purchases may be made using physically or electronically intercepted information. Finally, personal and credit or debit card information must be manually entered by the user at least for each site from which purchases are made, and in some cases for each individual transaction from a given site, which can become burdensome over time.
There is, therefore, a need in the art for a system supporting electronic transactions in a manner profitable at small dollar transaction values, as well as anonymous, secure, and easy to use.